Woolworths has reported early positive trends in Australian food sales for the second quarter, according to UBS analyst Shaun Cousins. Excluding tobacco, sales are up 5 per cent in the initial weeks, driven by better product availability, expanded promotions, and loyalty programs. However, Cousins notes that execution and margin pressures remain a concern for the supermarket chain. Woolworths is a major Australian company operating supermarket chains and retail stores across Australia and New Zealand. The company provides a wide range of products, including groceries, household goods, and apparel.
Total first-quarter sales increased by 2.7 per cent to $18.5 billion. Comparable sales in Australian food rose by 1.6 per cent, falling short of UBS and Visible Alpha forecasts. While the early second-quarter momentum is encouraging, Cousins points out that non-food categories such as baby, health & beauty, and pet products continue to face structural challenges. Earnings before interest and taxes (EBIT) growth for Australian food remains subdued.
In response to these results, UBS has slightly lowered its earnings per share (EPS) estimates for fiscal years 2026 and 2027 by 0.5 per cent and 0.7 per cent, respectively. The firm maintains a Neutral rating on Woolworths, reducing the price target from $30 to $29. Cousins suggests that Woolworths is actively working to boost sales, but cost-saving initiatives are still relatively small compared to the overall turnaround needed.
Despite the revised outlook from UBS, shares in Woolworths experienced a positive market reaction, rising by 2.5 per cent on Thursday. Investors appear to be responding favourably to the reported sales growth in the Australian food segment, indicating confidence in the company’s ongoing efforts to improve performance.
